Record keeping is an essential function of business success. If you don’t keep accurate records you could end up wasting money in many ways – including paying too much taxes, or paying late fees due to forgetting to pay an invoice. Not only that, if you have client files that aren’t kept accurately, you may lose their information and work will become very inefficient. Good records also serves as support for items reported on your tax returns…in case you are ever questioned by IRS or your State Department of Revenue.
Here are 8 Tips…
1. Touch Paperwork Once – If you have a good system set up, the moment you get the information (whether paper or computerized) you can process it and not think about it again. Plus, if you ever need that information again, it’ll be simple to find within seconds. Personally speaking, I have implemented a very useful program called Shoeboxed.com. Shoeboxed enables you to mail them your paper receipts and they will scan everything in and even categorize your expenses. The reports you can generate through Shoeboxed are accepted by IRS!
2. Automate When Possible – The best systems today save a lot of time and effort through automation. A great example of automation is online bookkeeping that’s connected with your bank account. It makes booking entries painless and automatic. There are so many services out there to choose from.
3. Hire a Professional – While you may think you can do it all yourself, there are some things such as finances that are often better left to professionals. Even a professional organizer might have some great ideas of how to make everything work together easily. Hiring a professional also enables you to focus on other tasks like growing your business.
4. Create a Process – Anything in your business that can be turned into a systematic process is then able to be ramped up and improved upon. That’s why systems and processes are so important in business, and that includes record keeping.
5. Choose the Right Software – There is no one-size-fits-all software. You have to know what you need in your business, what features you want the software to have, and whether you have the budget for what you want. Don’t choose the least expensive if it doesn’t offer everything you need and the ability to grow. Of course QuickBooks Online is a very popular but there are more affordable options like WaveApss.com. Also read Money Crasher’s article on 11 Best Online Accounting, Bookkeeping & Invoicing Software.
6. Keep Private Things Private – Your record keeping system needs to consider the level of security you need, based on the type of records that you’re keeping. By law some things have to be secured in a special way in the cloud, and by lock and key when physical. Ensure that you know the rules and regulations for your types of files.
7. Always Back Up Everything – No record keeping system is complete without a backup. This includes paper files. You must have a copy of everything in a safe place in case of a fire, computer crash or other unexpected disaster. I also recommend scanning records whenever possible and saving them in “the cloud” where you can access your records by Internet through any device. Dropbox.com is very useful for this purpose.
8. Start Now – Don’t wait until you earn more money, or have more clients, or – well, for anything. Get started from day one with your system and process so that you can perfect it as you build your business.
The worst thing you can do when it comes to record keeping is to simply not tackle it. You can streamline record keeping, systemize it and make it become second nature if you set it up right from day one.
HERE’S A RESOURCE – IRS has a whole page on their site dedicated to answer your question of “What kind of records should I keep?”